Buying a Property From a Relative or Friend? Read This First!

If you’re looking to buy a property from a friend or relative, which means there’s no realtor involved, here’s some important things to keep in mind, and to be aware of to avoid misunderstandings, or having your deal fall apart because of miscommunication.

You need to make sure the contract does not reference anything in regards to repairs. If the roof looks to be in need of replacement or if there are signs of any foundation problems, the appraiser may call for some kind of additional inspection. If it’s serious in their eyes, they may make the appraisal “subject to” having those repairs done. If the things you’re wanting to do are basically cosmetic, it won’t be an issue, BUT if there are serious repairs needing to be made (we had one recently where there was no floor in the dining room), something like that will have to be repaired or replaced prior to closing. Let me know if any questions on that.

Also, I know there’s no realtor involved, but you DO need to have the seller complete a seller’s disclosure form. It saves a lot of time and grief, as well as potential lawsuits. It will also tell you if there have been prior inspections, OR INSURANCE CLAIMS, and THAT’s important to know, too. The first home my husband and I bought had had a small fire, and we had no idea because it had been repaired so well, so those seller disclosures are very helpful for all kinds of reasons.

Finally, remember you’ve got a couple of things to be negotiated, other than the price. The estimated closing date is one, as well as making sure the seller understands they will be paying some closing costs. Sometimes they want to make a deal, and say, “that’s it, I want XXX $$$” but there are costs they will have to pay, including paying the title company to close it. It’s normal for the seller to pay for the owner’s title policy, and they’ll have $500 to $1,000 worth of costs in general, over and above the title policy.